Ocado Sees Double-Digit Revenue Growth, But Profits Set To Fall
Online retail specialist Ocado has posted group revenue of £1.46 billion in 2017, representing growth of 12.7% compared to the previous year.
The UK-based company saw revenue growth in both its retail business (+12.4%) and its Solutions unit (+16.2%). However, in its preliminary full-year results, Ocado says that it expects group profit to fall to £1 million, following increased investment during the year.
In its UK retail business, Ocado says that it has made ‘significant progress’, extending its online range to over 49,000 products, enabling Alexa voice-activating ordering and increasing capacity at its facilities in Andover and Erith.
As a result of this, the company saw growth in its customer base, with the number of active customers growing by 11.2%, to 645,000, and total order volumes growing by 14.3%.
Meanwhile, Ocado Solutions, which is developing the Ocado Smart Platform technology for online grocery services, also performed well in the past year.
In November, the unit announced its first international agreement, signing a partnership with France’s Group Casino, and last month, the company signed a new partnership with Canadian supermarket chain Sobeys.
Tim Steiner, chief executive officer of Ocado, described the last twelve months as “transformational” for the company.
“We have primed our Ocado Solutions business for growth and received an important validation of the business model through our latest partnerships with Groupe Casino and Sobeys,” Steiner said.
“Looking ahead, we are confident that we will be able to do further deals, with the momentum of new signings building over time,” he added.
Ocado says that, assuming economic conditions remain broadly stable, the company anticipates revenue growth in its retail business of 10-15% in the 2018 financial year, increasing capacity and market share.
“Now is the time to take advantage of our growth opportunities,” added Steiner. “We will invest to ramp up our new solution, in both Erith and Andover, and to have the right resources in place to meet growing demand for the Ocado Solutions offer.”
“We believe that taking advantage of these international opportunities now will make our virtuous cycle turn faster in the years ahead, and we expect that to translate into higher returns on capital. We look forward to our future opportunities and challenges,” he said.
Last week, Ocado announced that it is appointing Luke Jensen, the current CEO of its Ocado Solutions unit, as an executive director, effective 1 March 2018.
Lord Rose, chairman of Ocado, said that the board is confident that Ocado Solutions will create “significant long-term value” for the group, and so believes that it is important to have this aspect of the business represented at board level.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.